Tax officials will notify NABU of signs indicating bribery of foreign state officials — Zelensky has signed the law.

The President of Ukraine Volodymyr Zelensky has signed a law amending the Tax Code of Ukraine to incorporate the provisions of the Recommendations from the Organization for Economic Cooperation and Development (OECD) regarding tax measures aimed at combating bribery of foreign officials in international business transactions - bill 10319.

As previously reported by Judicial and Legal Newspaper, this document will facilitate the implementation of international tax standards in the fight against bribery of foreign officials and will also serve as another step towards Ukraine's membership in the OECD.

The OECD Council's Recommendations call for:

• the establishment of a clear and effective prohibition on the deduction from the tax base of illicit benefits related to the bribery of foreign officials, which is not contingent upon any investigation by law enforcement agencies or the initiation of judicial proceedings;
• the provision of appropriate guidance to taxpayers and tax authorities regarding the types of expenses considered as bribery;
• the simplification of the procedure for tax authorities to report suspicions of bribery to national law enforcement agencies.

Thus, the aim of the adopted Law is to introduce a mechanism for detecting potential illicit benefits prior to a court ruling. In effect, the bill is designed to create conditions to prevent taxpayers from providing illicit benefits to both foreign and national officials, as taxpayers will refrain from such actions in light of potential future tax consequences. This aligns fully with the principles of Tax Compliance promoted by the OECD.

Key provisions of the bill include:

• the introduction of a prohibition on deducting expenses for tax purposes in transactions related to providing illicit benefits to officials;
• the enhancement of the controlling authority's functions regarding the notification of the National Anti-Corruption Bureau (NABU) and the taxpayer about circumstances (facts) discovered during inspections that may indicate the provision of illicit benefits. Both the State Tax Service (STS) and the taxpayer will refer to a list of such circumstances (facts) that will be formed and approved by NABU in agreement with the Ministry of Finance;
• the opportunity for taxpayers to independently adjust their tax liabilities if it is confirmed that illicit benefits were indeed provided;
• the conduct of an unscheduled documentary audit of a taxpayer who has been convicted of providing illicit benefits to an official;
• the increase of the taxpayer's financial result by the amount of expenses that, according to legislation, were incurred with the intent of providing illicit benefits.

The Ministry of Finance noted that in preparing the bill for the second reading, the comments and suggestions from OECD experts were taken into account, who will assess Ukraine's readiness to join the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

The law will come into effect three months after its publication.

Earlier, Ukraine discussed with the OECD and IMF measures for reforming tax policy, as outlined in the National Revenue Strategy.